when is the equity in your home under threat

[r.chippy]

If you go down the IVR route, as i am a home owner does a IVR have any impact on your home. i.e Under what circumstances is the equity in your home under threat if any?

[MelanieGiles]

Hi chippy and welcome to the forum

If you have equity in your property at the time of proposing your IVA, your creditors will want to see that addressed in some form. Generally, if the equity is a small amount, creditors are happy to see that addressed by you paying over some additional contributions during a sixth year of the arrangement.

If the equity is a larger sum, then creditors usually like to see you re-mortgaging your property at the end of the IVA to release a portion of the equity. This sum would be in addition to contributions paid over a five year period.

Sometimes, if there is substantial equity at the beginning, a remortgage can be effected to offer a full and final settlement to creditors, thus avoiding the need for a 5 year IVA.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[batawi3]

Hi Melanie,

Thanks for all your contributions to the site, just a quick question. I am intending to ask my IP if I can get a mortgage, I am in my second year of my IVA. What are the rules here regarding equity if you buy a property while in an IVA, would I have to release any equity as my IVA does not have this clause in it. Would I be safe to buy a property and not have to be forced to remortgage it?

Thanks in advance and kind regards

batawi3

[DebtDummy]

batawi3, you can discuss a mortgage with your IP, but not a change in employment circumstances because you can still make your IVA payment? Yes, I did see your other post. The relationship between a client and an IP is one based on mutual respect and honesty in order for the IVA to be successful.

You should have not have told that poster '' that's a non-starter telling your IP...'' Excuse me if you think I am being harsh, but you obviously found an IP who got your IVA agreed. The least you can do is be honest with him/her when your financial circumstances change.

How does it look to the readers on this forum for you wanting to discuss a mortgage with your IP, but not a change in employment?

I and some others here would agree in saying, we wish we had an IP doing their best for us.

All I have left is my humour.

[MelanieGiles]

Hi batawi

You can have a mortgage during an IVA at your IP's discretion, however the mortage payments must be no more than you are already paying in rent. You will also need to find a deposit of 10% to 20%, so I wonder where that will come from?

If you do develop equity in the property throughout the IVA, you will not be required to make any contribution from this.



Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[batawi3]

Hi Melanie,

Thanks for the reply, my mum is willing to lend me up to 10K for the house as I am a single parent, and she has also agreed to pay half the mortgage to help me get on the property ladder. Is it a hard fast rule that it should be 10% because what my mum has would be about 5%

Thanks Melanie

[MelanieGiles]

Hi again

I think you will struggle to find a lender to give you a 95% loan to value mortgage whilst in an IVA.

Your mum could buy the property in her name with a 95% mortgage (assuming that she has a clean credit rating) on the understanding that when your IVA is completed that the property will be transferred to you. You could then pay your share of the mortgage payments in rent to your Mum - and this will be fine so long as the 50% payment is no more than you are currently paying.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[batawi3]

Hi Melanie,

Thanks again for your response, the only issue is that I earn considerably more than my mum so that is why she had agreed to give me the money. I will try that option with her, or contact a broker to see the best way forward

Regards

[DebtDummy]

Okay, I am not an IVA expert, but I want to make sure I understand this. Batawi, does NOT have to dislose to her IP that she is getting paid LESS as long as she can make her monthly IVA payments? Please read the post that plum wrote and Batawi's answer to him/her.

Hi Plum,

This is not the way to go about it, but what I did was decided to work on a fractional contract this year as I was really stressed at work. This affected my income, but I was still able to make payments. What I didnt do was tell my IP about it so I was really nervous when it came to my annual review as I was worried that my IP would ask me why I didnt ask him first. As long as you are able to maintain your payments, I dont see why you cannot change careers, but renegotiating your payments might be a non starter

And the IP didn't pick this up at the yearly review? Then her mum finds £10000 to give her for a deposit on her house, but couldn't give her £10000 to pay her debts?

Is it me being thick? I was under the impression the relationship between the client and an IP was one of 'trust'. I also thought an IP had to be told anything and everything that influenced the IVA succeeding.

Admin, is it me? Did I misconstrue something here? If I misread please accept my apologies,Mel and Batawi,but if I am correct then certain people should not be allowed to post here anymore.

This forum will lose it's credibility as a proper IVA information site. And that would be a great lose as it has helped so many people.

What? Are IVAs becoming a free-for-all? Anything goes as long as they are accepted or the IP misses a few pertinent points due to possibly being overworked?

Something is rotten in Denmark and it's more than the cheese.

All I have left is my humour.

[MelanieGiles]

Hi Debtdummy

Sorry, but I don't really understand the point you are making here. If your salary drops, but you are prepared to economise on expenditure to maintain IVA payments then as an IP I have no problem with that. The problems arise when payments start to be missed, and at that time the client must explain to the IP the reasons why. I really don't see the need to ask an IP for permission to accept a reduced salary - so long as it does not affect the client's ability to maintain payments. In my practice this happens quite often, but of course it is good practice to be forewarned about salary reductions just in case a problem arises in the future.

Insolvency practitioners are always there to provide help and support, but primarily to ensure that creditors get paid and that the debtor adheres to the terms of the proposal. Accepting a lower salary, but being able to maintain contributions is not an issue of concern.

Also it is up to this persons family if they wish to give a gift of £10,000 towards a property acquisition. I think the fact that this offer was not extended to assist with debt repayments is, with respect, irrelevant.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[DebtDummy]

Alright, my error and I did apologise in my earlier post. So, then people can take a reduction in income and as long as they can maintain their payments they never have to inform their IPs about the income change. However, it is good practice to forewarn the IP in the event the payments are missed the IP will know why.

Ermmm, okay. I will have to accept this answer as I am not an IP and would not be the wiser as to how these things are performed. All, I will say further on the subject is just because something is not illegal does not make it right.

As for batawi buying a home while under an IVA. Yes, this is possible. People do indeed purchase houses while under an IVA. BUT, batawi is under an IVA for a very good reason. Maybe paying it off then buying a home would be a better option? Afterall, a mortgage is a debt. For alot of people, the biggest debt they will ever have. So, why be in the process of paying unsecured creditors through an IVA and accumulate more debt while still in the process?

Also, will his/her being a property owner change the outcome of the IVA? Will the creditors want batawi to remortgage? Hmmm, I am rambling again. Better yet, I shall mind my own concerns. Yes, that is the best way.

Gee, I hope there are no boiler problems or any other problems with the house/flat,etc because it would be financially tight trying to make repairs while under an IVA. But then a variation meeting would sort that out.




All I have left is my humour.

[thebear29uk]

Hi DebtDummy

You do seem to be working yourself up about Batawi. As you rightly say a mortgage is a debt but the difference is it is a secured debt. All our problems tend to be with our unsecured debts. Batawi is doing nothing wrong, let alone illegal so why take so much interest in their problems. We all post on here asking if something is possible and seeking expert advice. I posted a question a couple of weeks ago asking if I could mortgage whilst in an IVA.

We are here to support each other, not question integrity. You are one of the best at offering support to people like Lily, Skippy, Coco and Kerri which is why your response to Batawi seems out of character.

Batawi should be complimented for taking a lower salary and still making the agreed monthly payments. Remember that the I stands for Individual. Others in this position would seek a variation meeting. If Batawi had withheld info about a pay increase this would be different.

Lets get back to offering words of support to each other on this forum. As the BBC Have Your Say forum 2 weeks ago proved there are enough people out there that don't have any sympathy for us or our circumstances.

Don't let the take your humour as well

Best Wishes

Dave

[batawi3]

To say I am baffled by DD's posting is an understatement

[Skippy]

Please can we all calm down! As Batawi states this is a friendly forum and we are all here to support one another, NOT sit in judgement. I must admit I was really surprised when I read the post fron Debtdummy as it was so out of character - she has been a big help to me and others on here.

As far as I can see, providing no-one does anything illegal, or anything that will jeopardise their IVA there isn't a problem. Good luck with the house Batawi, and please Debtdummy, keep your humour.

Onwards and upwards!!!
View my blog at: http://skippy13.blogs.iva.co.uk/

[batawi3]

I am with you on that one Skippy, we all need to calm down!!! I agree that we need to support one another and if Debtdummy was concerned she could have asked in a more polite way than a scathing attack.